John M. Elliott, Steven L. Friedman, Constance B. Foster, Dilworth, Paxson, Kalish & Levy, Philadelphia, for appellants.
Linda S. Lichtman, Deputy Atty. Gen., Guy J. Depasquale, Harrisburg, for appellees.
Thomas R. Balaban, Shaffer, Calkins & Balaban, Harrisburg, Wilbur S. Legg, Spencer LeRoy, Lord, Bissell & Brook, Chicago, Illinois, Harold R. Schmidt, Pittsburgh, for intervenor, Coal Mine Compensation Rating Bureau of Pa.
Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, and Manderino, JJ. Mr. Justice Nix did not participate in the consideration or decision of this case. Eagen, J., concurs in the result. Pomeroy, J., concurs in the result.
In Pennsylvania, coal mining companies are required to purchase insurance coverage for black lung benefits as a condition of doing business.*fn1 The rates charged for such insurance are subject to regulation by the appellee Pennsylvania Insurance Department. On August 1, 1975, a rate increase became effective without notice to the coal mining companies which purchase black lung insurance.
Today we must decide whether due process is satisfied by procedures which allow rate increases to go into effect without prior notice or an opportunity to present objections. We conclude that the coal mining companies have been denied due process, and set aside the 1975 rate increases.
The procedure for the regulation of insurance rates for workmen's compensation coverage in the Commonwealth is set forth in the Insurance Company Law of 1921, Act of May 17, 1921, P.L. 682, § 654, as amended, 40 P.S. § 814 (Supp.1976). Insurance rates are proposed annually by a rating bureau subject to supervision and examination by the Insurance Commissioner. Proposed rates for black lung coverage are proposed by the intervenor Coal Mine Compensation Rating Bureau of Pennsylvania [Rating Bureau], an organization composed of the insurance carriers which provide black lung coverage. No insurance policy may issue except in accordance with the rates proposed by the Rating Bureau, as modified, amended or approved by the Insurance Commissioner. Under this regulatory scheme, the Insurance Commissioner reviews the rates to determine if they are excessive or discriminatory. After proposed rates are filed and before they become effective, the Insurance Commissioner may hold hearings on the proposed rates, in which insured parties whose rates would increase are entitled to participate.*fn2
Until December 1974, no rate proposal could become effective without the prior approval of the Insurance Commissioner. At that time, the Legislature adopted an amendment which provided that, after a waiting period of thirty days, a rate proposal shall be "deemed" approved
unless disapproved or modified by the Commissioner.*fn3
On June 27, 1975, the Rating Bureau submitted proposed rates for black lung insurance for the year beginning July 1, 1975 [1975 rates]. The Rating Bureau proposed a rate of $27.31 per $100 of payroll, an increase over the $18.54 rate approved for 1974 and the $13.09 rate in effect for 1973.*fn4 Appellants, the Pennsylvania Coal Mining Association and six member coal mining companies [Association], were given no notice of the rate filing.
On July 16, 1975, the Association, having learned of the rate filing, requested a copy of the proposed rates and stated that it "may well have objections to the filing and may seek to intervene in the proceedings." Copies of the filing were hand delivered to the Association on July 18. The Association was not informed that the rates would be deemed effective unless the Insurance Commissioner took action within thirty days after the proposed rates were submitted.*fn5
On August 11, 1975, the Association petitioned to intervene in the rate hearing on the 1975 rates. The Association subsequently was informed that the 1975 rates had been deemed into effect. On August 21, 1975, the Association wrote the Insurance Commissioner, reciting that the Association did not receive notice that the 1975 rates had been ...